Selling a home is a messy business requiring a Herculean effort to wade through the arcane legalese of brokers and agents. A brave few with a DIY mentality opt to sell their homes themselves, but it's a hard market to crack. This process has become easier in the last few years due to the emergence of online resources.
Dozens of for-sale-by-owner (FSBO) websites have sprung up, like www. fsbo.com , www.homesbyowner. com , www.virtualfsbo.com and www. owners. com . Most charge a flat fee to list homes, and offer real estate forms, tips and research links to help people close their own deals.
These sites provide a way for users to subvert the monopoly of the U.S. National Association of Realtors (NAR), which charges about 6 per cent commission for listings and sales rights. This adds up to the cool $60 billion a year that lands in the pockets of agents, brokers and real estate companies.
The 6 per cent commission (technically a "negotiable fee") has come under fire recently from consumer groups, even landing the NAR in court last September at the hands of the U.S. Justice Department, which claimed that the NAR's monopoly was keeping commissions artificially high.
In Madison, Wisconsin, a city of only 200,000 people, www.fsbomadison. com (live since 1998 and featured a few weeks ago in the New York Times) lets home sellers bypass the hefty commission for a flat fee of $150. Today, the site sells almost 2,000 houses a year, accounting for 20 per cent of the area's real estate listings.
These properties would have netted the NAR $17.3 million in commission and listing fees, money that now remains in the homeowners' pockets.
The best alternative listing site for Canadian properties is www.propertyguys.com . It charges sellers a one-time fee of $249 (self-serve) or $549, which includes legal advice, and keeps houses online until they're sold. This allows interested parties to bypass the Canadian Real Estate Association (CREA) brokers and agents.
Real estate agents are predictably dismissive of this new trend and claim that homeowners using the websites can undersell their homes. They say agents are trained to negotiate, analyze markets, organize paperwork for closing and find the best price.
But in the recent bestseller Freakonomics, authors Steven D. Levitt and Stephen J. Dubner explain that hefty commissions aren't enough to motivate selling agents to get the best price for a house. Instead, agents often opt to sell quickly, closing as many deals as possible without waiting around for the volatile market to change in their favour. The authors discovered that real estate agents' own homes stayed on the market significantly longer than those of their clients, while the agents patiently waited for the highest bidder.
For those nervous about forgoing the security of an agent, however, middle-ground sites like www. buysiderealty.com exist. Here buyers can search for homes through online listings and even apply for a pre-approved mortgage through affiliate JPMorgan Chase. The buyer then makes an offer through an agent, albeit for a seriously reduced fee.
Most sites also urge FSBO buyers and sellers to invest time in doing the proper research and to hire a lawyer to check paperwork.
The site www.propertyshark.com meticulously details the histories of properties in New York State and a dozen other locationsin the U.S., giving info on crime stats, building permits, zoning regulations, repair histories, even flood maps.
In major U.S. cities like Chicago and Los Angeles, potential buyers can check out www.homepricerecords . com , which pours county records of property sales into a GoogleMaps template.
So before you jump into the waiting arms of a real estate agent eager to lighten your wallet, check out the Web and evaluate your options.